THE MANDATE EXPLOSION

August 26, 2004

States simply can't keep their hands off health insurance. For 40 years they increasingly have tried to micromanage health coverage, and premiums have ballooned as a result, say the Council for Affordable Health Insurance's (CAHI) Victoria Craig Bunce and J.P. Wiese.

Just consider the explosion of state mandates (a requirement that an insurance company or health plan cover (or offer coverage for) health care providers, benefits and patient populations that health coverage might not normally provide.

In some markets, mandated benefits increase the cost of health coverage as much as 45 percent.

In 1965, only seven benefits were mandated by the states; today, CAHI has identified 1,823 mandated benefits and providers nationwide.

In January alone, CAHI followed the introduction of 295 new mandates in states.

Mandates enjoy wide bipartisan support, and some states are much worse than others, say Bunce and Wiese:

Minnesota has 62 mandates, the most of any state, Virginia 54 and Florida 50.

Democratic-leaning Maryland has 58 mandates, while Washington, D.C., has only 16.

Republican Texas has 51 mandates, but conservative Alabama has only 18.

There are several ways to counter the mandate explosion, say Bunce and Wiese. One is for state legislatures (or Congress) to let people have access to mandate-free policies, which would be cheaper.

Another option is to encourage the expansion of health savings accounts -- tax-free medical care accounts that are combined with a high-deductible health insurance policy; HSAs can mitigate the impact of mandates because people must pay for smaller and routine expenditures out of their personal HAS account. So, even if a state requires insurance to cover a particular provider, the patient bears the marginal cost because the money comes from the HAS.